In the rapidly evolving landscape of wildfires, understanding the intersection of natural disasters, property risks, and insurance is more crucial than ever.
Julie Rochman, the former President and CEO of the Insurance Institute for Business & Home Safety (IBHS), joins WSRB's Cori Medrano to explore current wildfire trends, along with their impact on insurance and property risks, and critical strategies to safeguard communities.
Before continuing through this piece, be sure to stay informed with similar content by signing up for notifications.
Wildfire Trends and New Realities
Cori Medrano: Recently, the Smokehouse Fire burned 1.2 million acres in Texas in early 2024.
January, February, March – not normally what you would classify as “wildfire season”, correct?
Julie Rochman: There used to be a distinct wildfire season, yes. Now, however, wildfires happen pretty much all year.
There used to be more of a seasonal aspect to wildfire risk, but climate change and warming temperatures mean that we don't get hard freezes in places that used to see much colder weather. Among other things, this means that the bugs that infest trees don’t die from the cold, so they kill more trees, causing more deadfall and fuel, which is terrifying.
Cori Medrano: There are a lot of factors that help create ideal conditions for wildfire to breakout, including the ones you mentioned. Of course, another risk factor is drought.
When you think of drought, you think dry, perfect conditions for a fire to start. However, according to research conducted at Oregon State University, even the dampest areas of Oregon and Washington are expected to experience hotter and more intense fires this year.
The 2024 Smokehouse Fire in Texas burned 1,058,482 acres.
Julie Rochman: While no one can predict exactly where and when a wildfire will start, we can definitely see trends.
The drier it is, the more current fuel there is. But dampness means more vegetative growth, and vegetation is fuel – now and in the future; even when it isn’t an official drought, trees and shrubs can and will catch fire. And because we haven’t been clearing forest lands and we haven’t been spraying to kill pests, fuel builds up and can result in a really big, powerful blaze.
Cori Medrano: But not every fire is going to be big like the Smokehouse Fire in Texas, right? In other words, it’s not just big fires that we’re worried about, is it?
Julie Rochman: Correct.
There was a time in the last decade when every single county in Texas had a wildfire burning simultaneously. Just think about that for a moment – every county must respond; imagine the fire services resources required.
If you have a big fire, that’s one thing: you have mutual aid agreements, and all available firefighters pour in from wherever they’re stationed to help combat that big fire. But with multiple smaller fires burning literally all over the place, everybody’s kind of on their own.
On top of that, 2/3 of firefighters in the U.S. are volunteer, and many of those are well-versed in fighting structural fires, but not so with wildfire. To top it all off, there are fewer people signing up to become wildland firefighters these days.
Needless to say, we’ve got a problem.
Cori Medrano: I think about even for some of the departments that do have wildland fire training, that are adequately staffed, that are ready for wildfire – they can’t control the wind. And that’s when you see the massive spreading, like in Texas, for example.
Training is great, and it really makes a difference for homeowners and businesses and communities in general. But when you have that wind driven fire, it can be game over.
Julie Rochman: That’s so true!
And even when crews can successfully put out fires, that land has been scarred. The earth itself bakes and gets hard, causing flooding and all sorts of secondary hazards, including subsidence and landslides.
Impact on Insurance and Property Risks
Cori Medrano: One of the things that is always in the back of my mind is historically insurance companies are looking backwards, right? They're looking at historical loss data and historical fires.
When we look at historical data – green, yellow, red models – it seems so clear where companies should conduct business: the green, right? But what happens when those models inevitably fail to capture the nuance of wildfire? What happens when policies written in supposedly green areas go up in smoke?
My question is this: how can we, as an industry, start looking forward?
Julie Rochman: You're right. If conditions have changed, historical data is no longer as accurate as it otherwise would have been.
Insurance companies have been asking regulators if underwriters can use well-constructed wildfire risk models that are forward-looking.
But regulators have always preferred trending forward the backwards-looking models, rather than allowing carriers to use models based on future-oriented data and assumptions.
What we – every insurance stakeholder - should want is for underwriters is to be as accurate as possible, to match coverage availability and cost to relative degrees of risk. So, we need the tools to be able to do that more effectively.
Every homeowner wants to know whether they really are in danger; at least they should want to know that.
Cori Medrano: And more homeowners nowadays, in comparison to years past, are in danger, right?
Julie Rochman: Yes.
Of primary concern for the insurance industry is the increased level of exposure among home and business owners.
More people are living in the wildland-urban interface - the “WUI” - where development meets the edge of wildland.
Do the math on this one: more people living in areas where fires occur, hotter and drier weather, more frequent fires, and limited firefighting resources. It’s a clear recipe for mega-disaster.
And on top of that, there are very few enforced wildfire-related building codes, especially outside of California; Washington, for example, does not have building codes that try to mitigate wildfire - they have building codes that deal with electrical and other causes of fire, but not wildfire.
The wildland urban interface has grown by leaps and bounds since 1990.
Cori Medrano: Losses are getting more expensive too.
Just think about the average cost of a loss even 10 years ago: total loss of maybe $1 million, with a $500,000 home, contents, cars, and loss of use.
Now, with inflation and the real estate market? Its double that. And it takes time to rebuild.
Julie Rochman: Especially after a large catastrophe. The demand surge for plywood and for all those things only goes up. Because of this increased potential for large loss, underwriters need to look at properties differently than they ever have before.
But it is not just a residential issue. We shouldn't forget about farms and ranches – extremely exposed with expensive machinery and livestock.
Cori Medrano: Not to mention smoke damage to crops and the massive losses incurred due to that.
Julie Rochman: Right. So, while we think of wildfire as primarily residential losses – people living in the WUI – underwriters can’t forget about commercial exposure. It’s a huge issue that I don’t think has gotten enough attention.
But it all comes back to what you asked previously: how do we look forward?
We’re trying to be accurate, but we only know what we know and can only underwrite based on what is available to us. However, we can implement tools that give us a more defined perspective: for example, parcel-level models that show whether there is defensible space, trees overhanging the roof, propane tanks near structures - all types of important information for an underwriter to know about. These tools exist now, but regulators limit or don’t allow their use in underwriting policies.
Ultimately, the goal of insurance is to write – it’s not to avoid, it’s to write coverage.
So, if regulators and consumers want coverage to be both available and affordable, we need to let the underwriters do their thing with the best, most clear-eyed data available.
Cori Medrano: Otherwise, what’s happening in California – an exodus of insurers from the state – is going to continue happening, not just in California but in other states as well.
Julie Rochman: You look at what’s happened in Florida with hurricanes and how the state stepped in and warped the market with Citizens. And then you look at California, and they’ve blown up the Fair Plan rather than fixing the underlying problem – they’ve also warped the market in ways that are not incentivizing insurers to stay.
Prevention and Mitigation Strategies
Julie Rochman: I think some people just live in denial about the risk, and/or just feel like “well, bad stuff happens, what can you do?”
Turns out, there are lots of effective things you can do to reduce your risk of loss from wildfire. And people should do them because it makes sense. Period. Full stop.
Cori Medrano: I totally agree with you. There are things we can do from a construction standpoint with new homes like stop putting them so close together, and use better fire-resistant materials.
But some of those things can drive costs up. Builders complain that they will build less, and the home will be less affordable. It’s a bit of a double-edged sword.
Julie Rochman: Builders don’t like to be told what to do, and they always object to any suggestions about damage mitigation by shouting about increased costs, even when that simply isn’t a factor.
Also, homeowners’ associations can make mitigation more difficult, because they care about aesthetics above all else, and it is really hard to change HOA covenants. Many, if not most, covenants won’t even allow things that could make individual homes – and the entire community – much safer.
For example, using “Class A” fire-resistant roofing, like standing-seam metal roofing, is among the most important fire mitigation strategies we have. I don’t care how far apart your houses are – if a fire gets into your community, it’s going to jump from structure to structure as it throws off embers.
If your homeowners’ association doesn’t allow Class A roofs, that’s going to impact your insurance coverage availability and cost.
Cori Medrano: Even in the face of existing community regulations, there are things that people can do to better protect their homes, right?
Julie Rochman: Correct.
Most people focus on the wall of flames in a wildfire. But it’s really the embers that you must fear. They can travel on the wind for miles, and the fire services may not be around to douse flames that far from the perimeter of the main fire. For home and business owners, protecting against rogue embers is imperative.
One of the important goals in defending against embers is to prevent them being pulled inside a structure through the many exterior vents near the ground, or on the roof of a building. So, you can cover the outside of the vent with mesh. Pretty simple to do, and not costly. One thing to remember: if you can stick a golf tee entirely through the mesh, an ember can get through. Best thing to do is to use 1/8 inch mesh - that should do the trick.
Another absolutely crucial thing to do is to create “defensible space” in the zero to five feet perimeter immediately surrounding a structure – you have to keep it clear of any kind of fire fuel.
Cori Medrano: Obviously mitigation strategies go well beyond individual property owners.
Julie Rochman: Yes. Powerlines are a big consideration.
It's not surprising that everybody wants to hold the utilities responsible for devastation caused by fire, but it's a little late once everybody's homes have burned. We should really focus on prevention rather than retribution.
We’ve got aerial imagery now, drones that are able to fly the power lines and check whether something is happening. It’s a lot quicker than sending a guy out on a truck.
Cori Medrano: In my neighborhood, all the power lines are underground.
Julie Rochman: Yes, and they should be. They all should be. But there are places where that simply isn’t practical, or even possible.
Cori Medrano: Can you imagine what it would cost to get all the power lines across the United States underground?
Julie Rochman: Again, as we mentioned previously, there’s the issue of understaffed fire departments. These are the people who stand as the primary defense when a fire happens.
You know, it’s just so ingrained in our DNA to run from fire. As a result, there is nobody I respect more than someone who sees danger and runs towards it to do what they can to help. We need more highly trained people like this on the front lines.
Cori Medrano: So many fire districts are volunteer, and those volunteer numbers have really decreased. I think a lot of it is because of the cost of living going up so much. As a family, you can’t get by on a single income these days.
How can we turn this around?
Julie Rochman: I think there are enough people now in the fire service who know that they need help, enough people who understand at the federal and state levels in government who know we need to do something.
The good news, I think, is that things are starting to happen now.
Cori Medrano: Fingers crossed.
Julie Rochman: An important final thing to emphasize through all of this conversation is that you as an individual should evacuate when told to do so. Don’t think that you are going to be a superhero and take care of the fire all on your own with a garden hose or something.
With hurricanes, you can sometimes shelter in place. Same with tornadoes. But with wildfire, you cannot shelter in place. People die when they decide to stay to defend their properties. Nobody should ever stay when wildfire is in the area. NOT EVER.
With hurricanes, you get days of warning. With a wildfire, you’ve got a few minutes – and sometimes even less time - to get your things and get out as quick as possible. Being prepared for that eventuality is key.
Have a go bag ready and know what you need to do to get out of the area.
Cori Medrano: You never know with fire, and it's so different than some of the other natural catastrophes that you can predict a little bit more. Wildfires are completely unpredictable.
Julie Rochman: I mean, it’s a very primal fear, right?
It’s important to remember that there are things you can do to reduce your risk of loss. We’re not completely helpless in the face of this threat. And every day, people are working to better understand, educate, and change things for the better.
